On Might 24, 2024, the Massachusetts Division of Insurance coverage (the “Division”) issued Insurance coverage Bulletin 2024-06, “inducements, rebates and affiliated entities” (the “Bulletin”). The Bulletin is addressed to “all licensed insurance coverage firms and insurance coverage producers.” The Division issued the Bulletin to “remind insurance coverage firms, officers thereof, and insurance coverage producers licensed to function in Massachusetts” that Massachusetts regulation[1] prohibits, as an unfair or misleading act or apply in reference to the transaction of insurance coverage enterprise, insurance coverage firms, officers, and producers from “paying, giving, or permitting to pay or give, instantly or not directly, ‘something of worth’ or ‘any helpful consideration’, not specified within the insurance coverage contract, as an inducement to the acquisition of insurance coverage or a rebate of insurance coverage premium.” The Bulletin additional reminds insurance coverage producers that Massachusetts regulation[2] additionally prohibits any “particular favor or benefit” to accrue to an such producer that’s not specified within the coverage. Illegal rebates or inducements aren’t solely restricted to “reductions on insurance coverage premiums”, however quite such rebates or inducements “embrace funds, reductions or reductions, not specified within the insurance coverage contract, that may bestow something of worth, helpful consideration, particular favor or benefit on the insurance coverage producer.”
The Bulletin additionally addresses actions that may “not directly present the insurance coverage purchaser with a ‘particular favor or benefit’ or ‘helpful consideration or inducement’ not specified within the insurance coverage contract….” Particularly, the Bulletin makes clear that an insurance coverage producer, “or its widespread father or mother, might not enable an affiliated non-insurance entity to pay ‘something of worth’ or ‘any helpful consideration’, together with providing a reduced value or charge on items and providers, to a buyer of that affiliate the place the consideration is meant to induce that buyer to buy insurance coverage from the producer or the place it’s contingent upon the client buying insurance coverage from the producer” as doing so would journey Mass. Gen. Legal guidelines ch. 176D, § 3(8), thus constituting an unfair or misleading act or apply within the enterprise of insurance coverage.
Read the full text of the Bulletin.
[1] See Mass. Gen. Legal guidelines ch. 176D, § 3(8); see additionally Mass. Gen. Legal guidelines ch. 175, §§ 182-183.
[2] See Mass. Gen. Legal guidelines ch. 176D, § 3(8).
